After nearly two years of losses, the world’s Number Three chipset designer – Silicon Integrated Systems – returned to profitability after declaring roughly $2.96 million earnings in the third quarter of 2003.

Total losses of the chipset vendor narrowed to approximately $1.64 million within the first three quarters of the year, according to a DigiTimes publication. Provided that the company will continue the trend of profitability and rising shipments in the fourth quarter, the firm may even become profitable for the full year.

Earlier this year UMC acquired 30% shares of SiS and the CEO of the Hsinchu, Taiwan-based contract semiconductor manufacturer became the CEO of the Taiwanese second largest chipset designer as well. This February Mr. John Hsuan outlined some aspects of SiS’ future strategy. The key-aspects of the new ideology were joint development of advanced manufacturing processes with UMC and focusing on products for higher-end market in order to improve gross margins and return to profitability.

The new CEO also criticized SiS last year’s strategy of expanding market share with low prices. According to him, this caused the chipset designer’s gross margins to decrease 5 points from 26% in 2001 to 21% in 2002; for instance SiS’ gross margins fell to 17% in the fourth quarter 2002 what is unacceptably low. In order to return the company to profitability, the new CEO planned to refocus SiS on higher-end market segments.

Even though not everything is clear with SiS’ markets at this point, the company has been managingto increase its year-on-year sales practically throughout the whole 2003 so far, hence, probably the profitability point was reached because of this.

In addition, SiS plans to spin-off its fab business into an independent structure to further concentrate on chipsets development and marketing.

Unfortunately, there is practically no information about SiS’ business related to non-core-logic activities, such as I/O processors, multimedia chips and so on.